Division Orders and the Pugh Clause

Two protections worth understanding before you sign a lease, and one document worth double-checking after a well is drilled.

The Pugh clause

This protects you if only part of your acreage gets drilled. Without one, the entire lease can stay "held by production" from a single well — even if 90% of your minerals are never touched. It's one of the most important, and most often left out, protections a mineral owner can negotiate for.

The division order

After a well is drilled and starts producing, you'll receive a division order confirming your decimal interest in that production. Review this carefully against your actual ownership. Division order errors happen, and once you sign, it can be harder to correct than you'd expect.

Two habits that apply to both

Have the lease reviewed before you sign, not after — once a lease is signed and recorded, your ability to renegotiate unfavorable terms is extremely limited. And if you have neighbors or family who own minerals in the same section, compare notes; landmen often approach multiple owners in the same area.

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